9
The Impact of COVID-19 on Food and Drink in the UK
2020-08-27T14:02:11+01:00
OX1018547
2195
122709
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Report
en_GB
“The pandemic has created huge challenges for the food and drink industry, but it has also been the catalyst for huge opportunities. These are both immediate with many businesses thriving…

The Impact of COVID-19 on Food and Drink in the UK

£ 2,195 (Excl.Tax)

Description

“The pandemic has created huge challenges for the food and drink industry, but it has also been the catalyst for huge opportunities. These are both immediate with many businesses thriving from agilely adapting to new consumer needs and in the long-term as the crisis will leave a number of lasting legacies.
Although many aspects of the “next normal” are shrouded in uncertainty, Mintel expects this phase to be characterised by a heightened interest in physical health, emotional wellbeing, local businesses and communities, the environment and real value for money.”
– Emma Clifford, Associate Director – Food and Drink Research UK

This report will look at the following areas:

  • The Impact of COVID-19 on consumers’ views, behaviours and outlook for the future.
  • How COVID-19 has already affected the food and drink market.
  • Which behaviours will change in the short-term?
  • Which behaviours will change in the mid-term?
  • Which behaviours will change in the long-term?
  • What can we learn from previous slowdowns?
  • Lessons from other markets.

Table of Contents

  1. Overview

    • Key Issues covered in this Report
    • Products covered in this Report
  2. Executive Summary

    • The market
      • Figure 1: Expected impact of COVID-19 on the food and drink market, short, medium and long-term, 23 June 2020
    • Economising habits keep a lid on in-home food growth
      • Figure 2: Forecast of total UK value sales of food through retail, 2014-24
    • Drinking occasions fall by the wayside during lockdown
    • A potential perfect storm for alcoholic drinks post-COVID-19
      • Figure 3: Forecast of total UK value sales of alcoholic drinks, 2014-24
    • Less frivolous spending on soft drinks, but some gains from alcohol moderation
      • Figure 4: Forecast of total UK value sales of non-alcoholic drinks, 2014-24
    • The consumer
    • The emotional rewards of treating come to the fore
    • The spotlight on the nation’s health with have long-lasting implications
    • A keen spotlight on hygiene, seeing the role of packaging re-examined
    • The boost to the popularity of home cooking set to endure
    • Food shopping will be a target for economising
    • The desire to support local enterprises could be lasting
    • The boom in online shopping extends the reach of this previously stalling channel
    • Proactive environmentally-friendly habits will rebound
    • COVID-19: UK context
  3. The Impact of COVID-19 on Consumers

    • Anxiety levels align with case curve…
      • Figure 5: Mintel COVID-19 exposure anxiety index, 28 February – 3 June 2020
    • … but consumers remain anxious about their health
      • Figure 6: People’s level of concerns about the risk of being exposed to the coronavirus, 28 February – 3 June 2020
    • COVID-19 concerns by demographics
      • Figure 7: Proportion of consumers showing the highest degree of concern (4 or 5 out of 5) regarding the risk of being exposed to the coronavirus, by age, 28 February – 3 June 2020
    • UK begins to soften lockdown measures
      • Figure 8: Government COVID-19 lockdown exit strategy, published 11 May 2020
    • Lockdown fears moderate
      • Figure 9: People’s level of concerns about how the outbreak might affect their lifestyle, 28 February – 3 June
    • A bleak outlook for the economy
      • Figure 10: Consumer views on the impact of the COVID-19 outbreak on the UK economy and their own finances, 28 May – 3 June 2020
    • Consumers cut back outgoings, and add to savings
      • Figure 11: How consumers have been affected or changed their behaviour as a result of the outbreak, 21-28 May 2020
    • Household finances hold steady for most
      • Figure 12: changes in financial situation since the start of the COVID-19 outbreak, 21-28 May 2020
    • COVID-19 is yet to meaningfully affect most households’ well-being…
      • Figure 13: The financial well-being index, January 2015-May 2020
    • …but confidence for the year ahead plummets
      • Figure 14: Consumers’ financial confidence for the coming year, May 2020
    • Middle age groups feel particularly vulnerable…
    • …and self-employed respondents show the importance of the COVID-19 support package
  4. How COVID-19 Has Already Affected the Food and Drink Market

    • Britons told to prepare for isolation
    • Four in 10 adults have stocked up on groceries
      • Figure 15: Consumers who have stocked up on groceries/other supplies as a result of the COVID-19 outbreak, 28 February – 16 April 2020
    • Women, under-25s and parents most likely to have stocked up
      • Figure 16: Consumers who have stocked up on groceries/other supplies as a result of the COVID-19/coronavirus outbreak, by demographics, 9-16 April 2020
    • Retailers’ shelves were left bare
      • Figure 17: Consumers who say the are struggling to buy some products because of stock shortages, 16 April – 3 June 2020
    • Retailers strip back their ranges
    • Demand for household staples soars
    • Frozen and ambient food in high demand
    • Dairy and meat see high growth
    • Sales of baby food and baby care products saw the biggest hike
    • The outbreak has already had an impact on packaging preferences…
    • …and has hastened the move away from fresh food counters
    • Mainstream brands should benefit…
    • …but shortages drive up shoppers’ exposure to more brands
    • Single-portion and on-the-go formats hit
    • Shopping becomes less impulse-driven
    • Packed lunch items and to-go products hit
    • Dramatic shift from in-store to online shopping
    • Over a third of adults are shopping more online
      • Figure 18: Consumers who have increased the amount of shopping they do online as a result of the COVID-19 outbreak, 28 February – 16 April 2020
    • Retailers’ online capacity was quickly overwhelmed
    • Lockdown of pubs and restaurants sees foodservice spend decimated
    • Minimal increase in spend on takeaways
    • Only around a fifth of people expected to spend more on in-home food excluding takeaways
      • Figure 19: Expected spend on food for eating at home (excluding takeaways/home delivery) over the next month compared to usual spending habits, 16 April – 3 June 2020
    • Cooking ingredients likely do well
    • On-premise closures create some more demand for alcoholic drinks in retail
    • Drinks venues reach out to customers through online experiences
    • Health concerns limit consumption
    • Only 18% expect to spend more than usual on alcohol at home over the next month
    • A huge slump in alcoholic drinks sales expected for 2020
    • Key occasions for purchasing soft drinks have disappeared
    • Switching within soft drinks brings down average spend
    • However, two thirds of people expect to spend the same on non-alcoholic drinks
    • Cordials and juices do well, while sports and energy drinks are hit
    • The time for tea and coffee to shine
      • Figure 20: Consumers drinking tea more frequently since the COVID-19/coronavirus outbreak started, May 2020
    • Niche channels rapidly gather momentum
    • ‘Grocerants’ take off
    • Direct-to-consumer becomes a more important revenue stream
    • D2C selling is critical for independent drinks markets
    • An array of delivery services thrive
    • Local businesses attract more custom
    • Food waste becomes a major issue, but industries react with campaigns
    • Dairy
    • Meat
    • Fruit & veg
  5. Which Behaviours Will Change in the Short-term?

    • The popularity of home cooking is boosted
      • Figure 21: Changes to cooking from scratch since the start of the COVID-19 outbreak, by age and gender, 23 April – 7 May 2020
    • Enjoyment in home cooking is heightened with less time constraints
    • Helping the younger generation to build their confidence in the kitchen…
    • …and overcome concerns about food boredom
    • Home baking also benefits as a fun, relaxing, family-oriented activity
      • Figure 22: Changes to baking since the start of the COVID-19 outbreak, by age and gender, 23 April – 7 May 2020
    • A keen spotlight on hygiene, seeing the role of packaging re-examined
      • Figure 23: Behaviours and attitudes towards packaging and hygiene, 28 May – 3 June 2020
    • Hygiene concerns will also deter eating on the go
    • Consumers limit time spent in-stores
    • Meal planning becomes almost essential
    • Self-treating supported as demand for the feelgood factor rises
    • But self-treating also curbed by emphasis on health
      • Figure 24: Changes to how often consumers have been eating treats since the start of the COVID-19 outbreak, by age and gender, 23 April – 7 May 2020
    • Brands with links to emotional wellbeing likely to do particularly well
    • The importance of treats for “the big night in” occasion will also support sales
    • Widespread concerns about unhealthy eating and weight gain
    • Portion control becomes even more relevant
      • Figure 25: Consumers concerned about putting on weight and unhealthy eating as a result of the coronavirus outbreak, by gender and age, 23 April – 7 May 2020
    • Interest in food and drink to support wellness booms
      • Figure 26: Healthy eating as a priority since the COVID-19 outbreak, 30 April – 7 May 2020
    • Boosting the immune system is in the limelight
      • Figure 27: Selected attitudes towards health, 23 April – 7 May 2020
      • Figure 28: Products carrying functional claims related to the immune system, 2020
    • Products seen to support emotional wellbeing will flourish
  6. Which Behaviours Will Change in the Medium-term?

    • Some post-lockdown recovery for on-premise venues
      • Figure 29: Activities consumers are most looking forward to doing once the current social distancing measures are relaxed, 30 April – 7 May 2020
    • However wariness over busy public spaces will deter many…
    • …as will ongoing restrictions on social contact
      • Figure 30: Forecasted value of the UK foodservice market (adjusted for COVID-19 on 10 June 2020), 2014-24
    • More cautious spending another barrier for foodservice
    • Frozen and tinned food to gain in prominence
    • Diets set to become more health-focused
    • A bigger focus on immune health and eye health – for consumers and the food and drink industry
    • Flexitarian and plant-based trends will become further embedded
      • Figure 31: Agreement that the COVID-19/coronavirus outbreak has made a vegan diet more appealing, by age, 23 April – 7 May 2020
    • Proactive environmentally-friendly habits will rebound
    • SMEs are most vulnerable and may struggle to recover
    • Likely to see a higher levels of M&A activity
  7. Which Behaviours Will Change in the Long-term?

    • The importance of health amplified
    • Personalisation of health products and services set to rise
    • Alcohol moderation trend will gain momentum
    • Foodservice to regain ground at the expense of retail
    • Improved culinary knowhow will have long-lasting implications
      • Figure 32: Consumers who plan on cooking more from scratch after the COVID-19/coronavirus outbreak than they used to (ie use/prepare meals with raw ingredients), by gender and age, 23 April – 7 May 2020
    • More remote working equates to more at-home meal occasions
    • Online grocery shopping will have secured a wider audience
    • The desire to support local enterprises could be lasting
  8. What Can We Learn from Previous Slowdowns?

    • Food prices soared in 2008/09 recession and its aftermath
      • Figure 33: Annual change in value sales for the total food market in retail, 2007-11
    • Scratch cooking is a popular means of saving money
    • Squeezed incomes will hamper the recovery of foodservice
    • Baking should benefit if incomes are squeezed
      • Figure 34: UK retail value sales of the home baking market, 2007-12
    • A troublesome time ahead for the alcoholic drinks market
      • Figure 35: UK alcoholic drinks market value, 2007-12
    • Less frivolous spending on soft drinks
    • Food shopping will be a target for economising…
    • …but a savvy shopping mentality is already deeply entrenched
    • Switching within main meal components
    • Having boomed following the recession, discounters will continue to thrive
    • Own-label should gain further ground
      • Figure 36: Share of brands and private label in new launches in the food and non-alcoholic drink market, 2007-12
  9. Lessons from Other Markets

    • As a vital tool for social distancing, online grocery soars
    • The SARS epidemic indicates that some changes will have a lasting impact
    • UK can take cues from safety measures for food delivery in China
    • China reveals the critical need for local retailers to be agile
    • Social media’s application branches out into retail
    • UK companies will also need to re-invent themselves
    • A greater sense of kinship for local businesses was nurtured in China
    • Patriotic purchasing likely to endure
    • Caution prevailed after restrictions were eased in China

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